South China’s small businesses leading Asia Pacific in innovation and technology

GUANGZHOU, CHINA - Media OutReach - 17 April 2019 -Small businesses in South China generally experienced positive business
conditions in 2018, with small businesses from Guangzhou being the most likely
from Mainland China to state that they grew, according to a survey conducted by
CPA Australia, one of the world's largest accounting bodies.

Mr William Huang, President of CPA Australia South China Committee, introduces the findings of Asia Pacific Small Business Survey 2018

These positive
conditions are expected to continue in 2019 with Guangzhou's small businesses
also being the most likely from Mainland China to expect to grow. This reflects
the resilience and capability of South China's small business sector in the
face of a potentially uncertain and challenging year.

Key to this is the
very strong focus on innovation and technologyby small businesses from Guangzhou and Shenzhen -- with the survey
results showing that small businesses in those cities not only leading the rest
of Mainland China in the use of many technologies, but also leading small
businesses from the Asia Pacific. Further, the survey results also show a clear
link between innovation and technology, and strong business growth.

The findings from CPA
Australia's 10th annual Asia-Pacific Small Business Survey, follow extensive
surveying of more than 3,600 small business operators in ten markets, including
Australia, mainland China, Indonesia, Malaysia and the Philippines.

With 77 per cent reporting
that their business grew in 2018 and 46 per cent increasing the size of their
workforce, Guangzhou's small businesses experienced the most positive conditions
in Mainland China among the surveyed cities. The positive sentiment in
Guangzhou is likely to continue, with nearly 80 per cent of small businesses expecting
their business to grow in 2019 and over half expecting to increase their
headcount.

Mr William Huang,
President of CPA Australia South China Committee said that under a challenging
environment caused by trade tensions and other issues, small businesses in
South China generally performed strongly last year and show confidence in both the
local economy and their business growth in 2019.

"I believe this
confidence is built on their leading position on the utilisation of digital
technologies in their business and their innovative culture.

"The survey findings
in the Asia-Pacific show that high levels of adoption and utilisation of
digital technology is one of the most positive influencers to drive business
growth.

"We are not surprised that the small
businesses in this region have strong confidence since the Greater Bay Area is
one of the central engines of economic growth in Mainland China, with
world-class innovation and technology at its core.

"Both Shenzhen and Guangzhou are the top performers in the
Asia Pacific for online sales and are also leaders in the adoption of new
digital or mobile payment methods in transactions. Over 80 per cent of
businesses in both cities are earning over 10 per cent of their revenue from
online sales, and nearly nine in ten businesses generate more than 10 per cent
of their sales through new payment technologies.

"Further, we are delighted to find that small businesses from
South China are quite sophisticated in the technologies they are investing in
and adopting in their business. The survey findings show that they not only
have a strong capability to identify the suitable technologies to invest for
their short-term returns but also have an eye on the future and their
customers, with respondents in South China being the most likely to have
invested in Artificial Intelligence (AI) and customer relationship management
(CRM) software among all markets surveyed in the Asia-Pacific," Mr Huang says.

Increasing cost, especially staff costs, is the factor that
is most likely to have had a negative impact on businesses in South China in
2018, with nearly 60 per cent of respondents in Guangzhou stating that staff
costs was the cost most detrimental to their business, ranking top in the
surveyed markets.

"On the one hand, small business owners are facing increasing
costs such as staff costs, on the other hand, they are having difficulty
recruiting suitable staff to support their business growth, Mr Huang says.

To solve this dilemma, CPA Australia suggests that small
businesses revisit their company structure and cost structure and seek to
improve their business strategy and operating model.

"The development of the Greater Bay Area should accelerate
people movement throughout its 11 cities and attract non-local talent to the
area. Taking advantage of this development and new technologies, which are
changing the way people work, provides opportunities for small business owners
to get the staff they need to grow their business. However, this may require a
change in how businesses engage talent, for example, offering more flexible and
mobile work conditions to attract and retain the right skill sets from anywhere
in the Greater Bay Area, or collaborating with a distant team or
freelancers.

"In addition, through the interconnection of cities in the
Greater Bay Area, there are opportunities for financial institutions to work
together to create a better business environment for small businesses in South
China to access to finance and support their further growth.

"The slowing global economy and economic uncertainties are
making 2019 a challenging year for small businesses in South China, however,
CPA Australia remains positive. Strong domestic consumption in South China
supported by recent tax cuts, the region's leading capabilities in innovation
and technology, government policies to improve SME access to finance, and
emerging opportunities from the Greater Bay Area plan, make us confident that
South China's small businesses will continue to grow and stay vibrant," Mr
Huang says.

CPA Australia has six tips
for China's small businesses in 2019:

Look
for government incentives that are supportive of innovation

Seek
advice on which technologies are best suited for your business before investing
in those technologies

Use
big data analytics to analyse your customers to further improve customer
satisfaction

Explore
opportunities in Greater Bay Area, emerging economies on the Belt and Road, and
other fast-growing markets in the Asia Pacific region and Africa

Invest
in improving strategic and managerial skills

Undertake
a strategic review of your cost structure and potential business risks.

About CPA Australia

CPA Australia is one of the world's largest accounting
bodies with more than 164,000 members working in 150 countries and regions
around the world, and with more than 25,000 members working in senior
leadership positions. It has established a strong membership base of more than
18,000 in the Greater China region.

About CPA Australia Asia-Pacific Small Business Survey

The CPA Australia Asia-Pacific Small Business Survey provides
annual insights into the views of small businesses across the region and forms
part of a longitudinal study that began in 2009. The 10th CPA
Australia annual survey comprised extensive surveying of 3607 small business
operators in ten markets, including Hong Kong, Mainland China (Beijing,
Guangzhou, Shanghai, Shenzhen and Chongqing), Taiwan, Malaysia, Vietnam,
Indonesia, Singapore, the Philippines, Australia and New Zealand.